Well-intended Hickenlooper-Kasich plan is but ‘a Band-Aid over a gushing wound’

Author: Jimmy Sengenberger - September 5, 2017 - Updated: September 5, 2017

Jimmy Sengenberger
Jimmy Sengenberger

It’s refreshing to see solutions to complex problems plaguing this country come out of the “laboratories of democracy,” the states.  On the surface, that is precisely what Colorado’s own Gov. John Hickenlooper and Ohio Gov. John Kasich did in presenting a health care plan to congressional leaders last week: They shared ideas straight from the states.

On one hand, this is a good thing.  State governors ought to take a proactive interest in major congressional efforts over national policy issues with direct state implications.

But the founding fathers didn’t intend for governors to share ideas for federal overlords to then carry out.  They intended for state governors to implement ideas in their own states, as individual laboratories across the land, and to experiment with new solutions to pressing challenges.  The beauty of this model of federalism is that it protects the entire nation from falling prey to a failed, one-sized-fits-all approach to a substantial issue.

Unfortunately, in their proposed plan to address Obamacare’s collapse, Govs. Hickenlooper and Kasich essentially cede their laboratory power to the feds by presenting ideas almost exclusively for greater federal actions — not by advocating for more authority to the states.  If they favored the latter, then they might advocate for the repeal-and-replace legislation put forward by Senators Bill Cassidy (Louisiana) and Lindsey Graham (South Carolina).

In a new analysis of the Hickenlooper-Kasich plan for the Millennial Policy Center (MPC), my health care reform colleagues and I argue that the plan is well-intentioned and offers some ideas worthy of debate and consideration, but it’s like placing a Band-Aid over a gushing wound.  You hope it will stop the bleeding but are sure to be sorely disappointed.

The governors’ plan essentially boosts subsidies for individuals and insurance companies, appropriates additional funding for cost-sharing subsidies and creates a $15 billion reinsurance fund to help states aid insurers in offsetting the expense of sicker patients.  It also suggests a $100 million advertising campaign to get young people to sign up for Obamacare.

Regrettably, Hickenlooper and Kasich essentially propose throwing more money at the problem, hoping that something sticks, while notably ignoring the primary cost-drivers of health insurance and leaving both the individual mandate and Medicaid expansion intact.

Health insurance regulations are the primary stimulus for skyrocketing costs.  As reported in the MPC analysis, a comprehensive review finds that Obamacare’s mandated “essential health benefits” raise the cost of insurance by 9%, and another analysis shows its various mandates — EHBs, community rating, age rating, etc. — increase health insurance costs by up to 68%.  The governors do suggest offering states a bit more flexibility when it comes to EHBs, but it’s not enough to bend the cost curve.

If the goal is to bring down costs, then we must address the main cost drivers in the first place.  How many young, healthy Millennials who are not currently insured are going to buy it because someone on TV tells them to?  If the costs still outweigh the benefits, one won’t purchase insurance no matter how many commercials they see.

It is good to see Gov. Hickenlooper weigh in on the health care debate. Coloradans on the individual market are bracing for premium increases of 27% next year, an overwhelming amount on top of already-staggering premiums and rising deductibles.  It makes sense that our elected governor would take a position on such a decisive issue.  Unfortunately, he seems to have taken the wrong tack.

The best solutions come about when the states implement their own visions.  The proposal put forward by Sens. Cassidy and Graham — which is still on the table in Congress before the reconciliation time window runs out on September 30 — would return power to the states by permitting each to customize their health care systems to the unique needs of their residents, with federal support, and by block granting Medicaid.

As my MPC healthcare team wrote in our recent analysis of Cassidy-Graham, “Offering states the flexibility to develop their own solutions and innovative strategies to lower costs, improve access, and expand coverage will produce a variety of best practices rather than forcing a failed or untested one-size-fits-all approach on the entire country.”

Govs. Hickenlooper and Kasich should be commended for taking a leadership role from the states on this crucial issue. With individual insurance markets in a death spiral, the challenges of healthcare costs and access cannot be ignored.  However, we need much more than a top-down, federally-placed Band-Aid over this gushing wound called Obamacare.  We need to return genuine power to the laboratories of democracy.

Jimmy Sengenberger

Jimmy Sengenberger

Jimmy Sengenberger is the host of "Business for Breakfast" on KDMT Denver’s Money Talk 1690 AM and "The Jimmy Sengenberger Show" on News/Talk 710 KNUS. He is also the president and CEO of the Denver-based Millennial Policy Center.